banner_ad

Depriciation ?

AS 754 views 4 replies
Why depriciation is an indrect exp and charged to profit/loss a/c?
Replies (4)

In simple words, Profit and Loss contains only those expenses which are NOT directly attributable to the main business activity of an enterprise/firm. 

Depreciation is charged on wear and tear of Fixed Assets and cannot be directly charged to the products and services.

So, it is NOT a Direct expense and hence comes in the Profit and Loss A/c.

In case of manufacturing concerns depreciation relating to plant& machinery used in the factory is charged to the manufacturing account as the loss is incurred directly in relation to manufacture of the goods from which the concern earns direct income. 

But for other assets used in the office of the manufacturer or say in case of a trading concern having assets like cars, computers etc.. the depreciation is not incurred directly in relation to the direct income earned by the concern.  But since it is used in the business of the concern it is shown as an indirect expense.

Thank u disha n giri
As explained by Giridhar,Depreciation can be classified as direct expense if it's of asset which are directly used in manufecaturing or trading activity.


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 29 April 2026
Manager- Finance and Compliance

Naveen Fintech Pvt Ltd

Kolkata

CA Inter

View Details
Company
Featured 13 April 2026
GST CONSULTANCY

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 28 March 2026
Accountant

Ashok Amol & Associates

New Delhi

B.Com

View Details
Company
Featured 28 March 2026
CA Final

Ashok Amol & Associates

New Delhi

CA Final

View Details
Company
Featured 02 May 2026
Senior Executive

hitesh chandwani & co

Pune

B.Com

View Details
Company
Featured 14 April 2026
GST CONSULTANT

Abhishek G Agrawal & Co.

Korba

CA Final

View Details